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Sales Tax: What's My Responsibility?

Ben Franklin once said “In this world, nothing can be certain except death and taxes.” But when it comes to sales taxes and how they affect estate sales, some states are more certain than others.

Sales tax laws vary from state to state, especially when it comes to exemptions. This can make it difficult for budding estate sale companies to determine their responsibilities. Some are expected to collect and pay state sales tax, some are exempt. But even with those two options, it’s not just black and white.

It can be confusing, especially if you’re running an estate sale company in more than one state on a regular basis. Reading through legal text, hoping to find the one sentence that applies to your situation, can be difficult. And time consuming. And possibly fruitless. The business of estate liquidation is not always specifically mentioned in the law or its list of exemptions. Some states include specific exemptions for auctions, but make no mention of professionally-run tag sales. Are they basically the same in the eyes of the law? Sometimes. But not always.

And if you’re not an estate sale company, and instead seeking one out to liquidate your assets, you’ll want to know your responsibilities, and be confident the company you hire does, too.

There are exceptions to every rule and caveats for every emptor, so in an attempt to make everyone’s lives easier, we’ve collected all the basic information regarding sales tax in all fifty states, and compiled them here for your reading pleasure.

It’s important to note, though, that tax laws frequently change, and can be interpreted differently. When asked for clarification on a rule, more than one representative at the various departments of revenue made a point of saying their explanation was only their opinion. So while this document can act as a guide—a jumping off point—you should contact your state’s department of revenue to confirm your responsibilities. But don’t worry, we’ll give you the contact information, too.

Your state can fall under a few different categories.

No sales tax
Five states—Alaska, Delaware, Montana, New Hampshire, and Oregon—do not have a sales tax. How easy is that? So easy.

Take a moment and enjoy that feeling. It will be fleeting.

Two states have taxes that affect vendors, though they are not technically sales taxes. But a tax by any other name must still be paid. Hawaii assesses a 4% General Excise Tax on all business activities, and Arizona’s Transaction Privilege Tax, which is usually passed on to the customer, is assessed for the “privilege of doing business in Arizona,” according to a Department of Revenue representative.

Estate sales as “occasional”
Every other state has a sales tax, but they also have exemptions. Frequently, estate sale companies fall under the category of “occasional,” “casual,” or “isolated” sales, not unlike privately held garage sales. The basic idea behind this exemption is that because the person hiring the company to hold the sale as essentially a one-off, sales taxes aren’t necessary.

This is always done with the stipulation that ownership of the property at no time transfers to the seller, and frequently that the items to be sold remain in the home of the person liquidating their assets.

Arkansas, Georgia, Illinois, Indiana, Michigan, Minnesota, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Tennessee and West Virginia all have this type of exemption.

But there are a few extra exceptions.

In some states, exemption from sales tax relies on the liquidator’s willingness to release the name of the seller (or the seller’s willingness to be identified). In Illinois, for example, agents acting on behalf of an undisclosed client are considered to be the owner of the property being sold, making them responsible for the tax. If the company discloses the client’s name, the sale is taxable to the principal and not the agent. Missouri and North Dakota have a similar rule—if the client is undisclosed, it is the responsibility of the estate sale company to collect the tax.

Oklahoma’s rules are even more strict, allowing exemptions only on estate sales held following a death. The sale, lasting no more than 3 days, must be held at the home of the deceased, within six months of his or her passing, by someone who does not hold a sales tax permit.

So if you’re operating within one of these states, keep the terms of the various exemptions in mind when deciding if you need to collect sale tax.

Sale of tangible property
Every other state considers estate sales to be taxable, as they are the sale of tangible property by a vendor. The estate sale companies are expected to register with the state and collect the state sales tax (and, perhaps, other county / city sales taxes as well).

Your state may have exemptions for specific items, like motor vehicles, so even if you know you are required to collect sales tax, it’s important to familiarize yourself with any list of exemptions your state may have. But in general, the majority of states require estate sale companies to collect sales tax.

ArizonaTax Rate: Varies Requirement: YesWebsite: https://www.azdor.gov/Business/TransactionPrivilegeTax.aspxContact: (602) 255-3381Additional Details: As a retailer in the eyes of the state, estate sale companies must register with the state and pay the Transaction Privilege Tax (TPT) Tax. The tax rate varies depending on location.

IllinoisTax Rate: 6.25% Requirement: Yes/NoWebsite: http://tax.illinois.gov/LegalInformation/Regs/Part130/130-1915.pdfContact: 800-732-8866Additional Details: A liquidator acting on behalf of an unknown or undisclosed principal is considered to be the owner of the tangible personal property that will be sold and is responsible for paying Retailers' Occupation Tax on the gross receipts from the sale. If the principal is disclosed, if the tangible personal property sold would constitute an occasional sale, then the sale is not taxable. If tax is due, it is based upon the total selling price, including any commission.

IndianaTax Rate: 7% Requirement: NoWebsite: http://www.in.gov/dor/files/sib20.pdfContact: 317-232-2240Additional Details: The sale is considered a casual sale and therefore not taxable.

IowaTax Rate: 6% Requirement: NoWebsite: https://tax.iowa.gov/iowa-sales-tax-and-auctionsContact: 800-367-3388Additional Details: The agent-principal relationship dictates that if the owner of the property meets the occasional sales requirement, so would their liquidator.

MinnesotaTax Rate: 6.88% Requirement: NoWebsite: http://www.revenue.state.mn.us/businesses/sut/factsheets/FS132.pdfContact: 800-657-3777Additional Details: Estate sales are considered an isolated sale if the items are never owned by the company, if they do not carry insurance on the property, and if the company and the owner of the property have a written agreement.

MissouriTax Rate: 4.225% Requirement: Yes/NoWebsite: http://dor.mo.gov/business/sales/Contact: 573-751-2836Additional Details: The principal of the sale is responsible for sales tax. If the estate sale company discloses the principal of the sale (that is, the person or persons who hired them), it will be the responsibility of the client to pay the tax. If the company does not disclose who the estate sale is for, the company is seen as the "seller," and sales tax becomes their responsibility.

NebraskaTax Rate: 5.5% Requirement: NoWebsite: http://www.revenue.nebraska.gov/info/6-361.pdfContact: 800-742-7474Additional Details: If the sale lasts no more than three days and is held at the client's home, no taxes need be charged.

New JerseyTax Rate: 6.875% Requirement: NoWebsite: http://www.state.nj.us/treasury/taxation/su.shtmlContact: 609-292-6400Additional Details: As long as the estate sale company is not taking possession of the items for sale in their own inventory and are selling the items at the individual's home, the sales are not subject to tax.

North DakotaTax Rate: 5% Requirement: YesWebsite: https://www.nd.gov/tax/data/upfiles/media/gl-22054.pdf?20170428133923Contact: 701-328-1246Additional Details: If the company discloses who they are conducting the estate sale for they would not need to collect sales tax. It's considered a casual sale. If they do not disclose who they are conducting the estate sale for they do need to collect sales tax--it is considered a consignment type sale.

OklahomaTax Rate: 4.5% Requirement: NoWebsite: https://www.ok.gov/tax/Businesses/Tax_Types/Business_Sales_Tax/Contact: 405-521-3160Additional Details: Sale must last no more than 3 days, must he help within 6 months from the death of the estate owner, and held on the premises of the former residence of the decedent by a person that is not required to be licensed pursuant to the Transient Merchant Licensing Act, or who is not otherwise required to hold a sales tax permit.

Be sure to follow up with your own research. While we’re confident about the information here, laws and tax rates can change. We reached out to many Departments of Revenue in this process, and found speaking to a representative to be a relatively simple process, if occasionally time consuming. (We now have very strong feelings about hold music. I don’t remember which state had us belting out “Total Eclipse of the Heart,” as we waited, but I’d like to give them props regardless.) But for both the company and those who hire them, knowing the state’s expectations for estate sales is vital.